Two get prison for roles in Alpha finance scheme

DYNEGY INVESTIGATION2 sentenced in Alpha caseOne receives 15 months, another given one month

TOM FOWLER, Copyright 2006 Houston Chronicle

Published 6:30 am, Friday, January 6, 2006

Two colleagues of former mid-level Dynegy executive Jamie Olis received prison sentences of 15 months and one month each Thursday for their roles in a 2001 finance scheme.

Gene Foster, a former vice president who was Olis' boss, and Helen Sharkey, a former accountant, were indicted with Olis in 2003, but cooperated with the government, pleading guilty to conspiracy.

Olis fought the charges, however, and in November 2003 a jury found him guilty on six counts. Judge Sim Lake sentenced him to 24 years in prison, but the 5th Circuit Court of Appeals overturned the sentence late last year and ordered a new sentence.

Foster was sentenced to 15 months in prison, three years probation and a $1,000 fine.

Sharkey received the one-month sentence and will have to pay a $10,000 fine. She will not report to jail until Oct. 5, however, so she can continue to care for her two 3-week-old sons.

"I know this will interfere with your family, but it's the least severe sentence I could in good conscience impose," Lake told Sharkey.

The three were indicted for their roles in Project Alpha, a transaction that helped Dynegy inflate its reported cash flow by as much as $300 million. The company later restated the results of the transaction.

Lake had planned to re-sentence Olis Thursday, but decided to delay the resentencing and hold a new hearing when it became clear the government and defense were far from agreement on how much Project Alpha cost shareholders. A date for the hearing has not been set.

Olis' attorney, David Gerger, said that with the Foster and Sharkey sentencings complete, he hoped he and the government could come closer to an agreement on the damages.

"It seems to me in light of this, a reasonable settlement should now be possible," Gerger said.

Foster and Sharkey could have faced up to five years in prison without parole, but in exchange for their cooperation in the investigation and trial the government recommended sentences of 30 months for Foster and 18 months for Sharkey. Foster testified at trial while prosecutors said Sharkey assisted outside the courtroom.

Their lawyers requested in-home detention for both.

During the sentencing hearing, Foster told the judge he regretted his involvement in the transaction.

"I was disgusted with myself, my former company and my former colleagues," Foster said. He stressed the difficulties prison time would bring to his family, including his three children. "I just don't know if my wife will be able to hold things together in my absence."

Lake told Foster his sentence may be reduced if he followed the rules while in prison.

Sharkey's attorney, Jim Lavine, said she was emotionally incapable of speaking on her own behalf in the courtroom, but he told the judge she was remorseful for her part in Project Alpha. He noted she had the smallest role in the deal of the defendants and was the first to accept responsibility.

Lake said he agreed Sharkey was the least culpable and made a point of saying she "acted in accordance with instruction from her superiors, including the chief financial officer, Dynegy attorneys and others who have not been indicted."

The former CFO, Rob Doty, was mentioned by Foster by name during the trial as having been aware of Alpha, but neither he or any other executives have been charged in the case.